IMF Rejects FBR Request to Cut Property Transaction Taxes

The International Monetary Fund (IMF) has prohibited the Federal Board of Revenue (FBR) from reducing transaction taxes on Pakistan’s property sector. This development contradicts earlier claims by federal government officials that the IMF had agreed in principle to lower the withholding tax on property purchases by 2 percent from April 1, 2025. The IMF has also stood its ground against lowering tax rates on tobacco and beverages. Meanwhile, the federal government must also provide written assurances that provinces will not engage in wheat procurement in case of shortage. The IMF has expressed willingness to expand Pakistan’s existing $7 billion Extended Fund Facility (EFF) with climate-related funding under the Resilience and Sustainability Facility (RSF). While the exact amount remains uncertain, earlier reports suggest up to $1.2 billion could be allocated for a Climate Resilience Fund (CRF). IMF Resident Rep Mahir Binci confirmed that the lender has not agreed to lower withholding taxes on property transactions or adjust tax collection targets for March 2025. So it seems FBR is likely to miss its Rs. 1,220 billion revenue target for the current month. A proposal has been made to shift this shortfall to April and May’s targets rather than June.